Philippines eyes retail dollar bond for OFWs

Finance Secretary Benjamin Diokno said the Philippines is looking to borrow more in US dollars, with a planned retail bond offering catering to overseas Filipino workers (OFWs) before the year-end.

In a chance interview with reporters, Diokno said the total amount has yet to be determined, but the offering will cater mainly to OFWs who can purchase using e-wallets.

“We’re planning to issue retail dollar naman, siguro [maybe] before the end of the year. This is for the OFWs. They can maybe buy $100 using the e-wallet,” he said.

Just last week the government raised $2 billion or around P117 billion from the issuance of triple-tranche dollar-denominated bonds including five-year and 10.5-year global bonds, and a 25-year ESG or environmental, social, and governance bond.

The government’s running debt hit a fresh record high of P13.021 trillion as of end-August, up by 1% from P12.98 trillion as of end-July.

The planned issuance comes amid the strength of the US dollar against most regional currencies, with the Philippine peso sinking to fresh all-time lows.

The peso last Monday closed at P59:$1, marking the 12th all-time low so far this year, with further policy tightening expected in the United States.

“It will not hit P65 [to a dollar], that’s my prediction. May mga nagsasabi P68 [to a dollar] eh, wala ‘yun. Don’t believe them otherwise you’ll get burned,” Diokno said.

(It will not hit P65 [to a dollar], that’s my prediction. There are some saying P68 [to a dollar] but that’s nothing. Don’t believe them otherwise you’ll get burned.)

Diokno added, however, that “if you don’t need to borrow in dollars, don’t borrow in dollars.”

The foreign exchange fluctuations could also impact inflation, with the country being a net importer of petroleum products which are purchased in dollars.

READ: How weak peso vs. dollar affects inflation, purchasing power

The Organization of the Petroleum Exporting Countries and its allies (OPEC+) just recently said they would cut down oil production by 2 million barrels a day, putting pressure on the global supply.

“I think they are panicking kasi gusto nilang ma-maintain ang $100 a barrel kasi pababa na, so let’s see whether they can sustain it,” Diokno said.

“Admittedly, may impact talaga sa atin dahil ang basis kasi namin ng projection is $90 per barrel so anything higher than $90, may impact to sa inflation,” he added.

(I think they are panicking because they want to maintain $100 a barrel because it’s going down, so let’s see whether they can sustain it. Admittedly, this will impact us because our basis for our projections is $90 per barrel so anything higher than that will impact inflation.)

Inflation accelerated to 6.9% in September, faster than the 6.3% print in August and the central bank’s 2% to 4% target range. — DVM, GMA News